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Britain’s competition regulator eased the Microsoft-Activision deal slightly, sending game publisher shares soaring.
Shares of Activision Blizzard Inc (NASDAQ:ATVI) soared Friday on positive news about the UK Competition and Markets Authority’s stance on the Microsoft deal (NASDAQ:MSFT). According to reports, the UK’s competition regulator has tempered Microsoft’s impending takeover. In a statement, CMA stated that the computer software giant’s acquisition of Activision was no longer perceived as a threat to competitive gaming.
On Friday, Martin Coleman, who is leading the CMA investigation, said:
“After considering the additional evidence provided, we now tentatively conclude that the merger will not substantially reduce competition in console game services because the costs to Microsoft of keeping Call of Duty off PlayStation will outweigh any gains from such action. ”
However, Coleman also pointed out that regulatory agencies are still looking into other gaming-related issues.
“Our tentative view that this deal is causing concern in the cloud gaming market has not been swayed by today’s announcement. Our investigation will be completed by the end of April,” the chairman of the independent expert panel said.
Activision Share Up 5% as Microsoft Wants to Close Acquisition
Activision shares rose more than 5% during the US trading session after the CMA announced the Microsoft verdict. By contrast, the software giant’s shares dipped slightly amid the broader market slump.
Nonetheless, the CMA’s approval of the Activision acquisition is a win for Microsoft as it seeks to expand its video game brand. In a statement, a Microsoft spokesperson said:
“We appreciate the CMA’s rigorous and thorough evaluation of the evidence and welcome the updated interim findings.”
The tech company’s renewed commitment to gaming is also reflected in the acquisition of Bethesda Softworks’ parent company, ZeniMax Media.
CMA previously feared the worst regarding Microsoft’s acquisition of Activision, citing higher prices and less choice. Notably, the UK competition regulator is also concerned that the deal could stifle competition in the console games market. However, regulators backed down after receiving substantial feedback from various stakeholders about the deal.
Other Developments of the Agreement
Microsoft also recently received additional support from other companies that were previously either ambivalent to the Activision deal or directly opposed to it. The tech giant won favor by convincing competitors it would share Activision’s most coveted IP with these other platforms. For example, Microsoft revealed last month that it signed a legally binding, decade-long agreement with Nintendo to share ‘Call of Duty’.
Microsoft has also previously expressed a similar stance towards its biggest gaming rival Sony, which manufactures the wildly popular PlayStation console. However, Sony is yet to play ball with the computer software giant regarding its collaborative offering.
The company Bill Gates founded is offering an olive branch to chip giant Nvidia (NASDAQ:NVDA), which previously opposed an Activision takeover. Microsoft says it has signed a deal with the Santa Clara-based company to get its Xbox games onto Nvidia’s cloud gaming service. Additionally, Microsoft plans to bring Activision’s game library to Nvidia’s game-focused platform after the acquisition closes.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He loves to unravel crypto stories to the basics so that anyone everywhere can understand them without too much background knowledge. When he’s not deep into crypto stories, Tolu enjoys music, loves singing, and is an avid film lover.
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